As employment surged by levels not seen in four years, the overall vacancy rate for the Houston metro area dipped to 11.3 percent—the lowest level since 2006. Meanwhile, rent growth accelerated 3.8 percent to an average of $766 per month.
Hendricks & Partners reports that the metro area added 82,300 jobs in the last 12 months, bringing the unemployment rate down 110 basis points to 7.0 percent. The mining and logging sector posted the largest gains, while leisure, hospitality, education and health services were close behind. Not surprisingly, apartment owners have witnessed a dramatic uptick in leasing activity over the past three months, resulting in the strongest first-quarter gains in 10 years.
Additionally, Q1 2012 saw a surge in new development as 1,473 units were brought online. This is nearly the annual total for all of 2011, though few expect development to reach the decade annual average of 9,200 units. Multifamily permitting also soared, coming in at 2,985 units over the past three months. This is an increase of nearly 400 percent above 2011 levels.
The largest improvements in vacancy occurred in the Clear Lake/Friendswood and North Houston submarkets, with both declining 240 basis points year over year to 7.8 percent and 14.4 percent, respectively. The submarkets with the lowest vacancies continue to be Northwest Houston and the area near the West Loop.
As far as further employment growth is concerned, Hendricks & Partners reports that the Port of Houston—the second largest in the U.S.—spurred over 190 corporate relocations and expansions over the last 12 months. One of these expansions, CH2M Hill Inc, has announced future plans to hire 333 full-time workers while preserving its existing 167 full-time personnel. Furthermore, Direct Energy—which relocated from Toronto—has announced a need for 200 additional office personnel in the near future.
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